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First Move with Julia Chatterley
Season of Pumpkin "S.P.I.C.E" on Global Markets; Russian Commander says Situation in Kherson "Very Difficult"; Netflix Bounces Back, Adds 2.4M Subscribers in Q3; PM Liz Truss Fights back During Prime Minister's Questions; Fitch Ratings Slashes U.S. Growth Forecast for 2023; Entrepreneurs Turn to Waste-Free Farming. Aired 9-10a ET
Aired October 19, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
JULIA CHATTERLEY, CNN HOST, FIRST MOVE: A warm welcome to "First Move". Fantastic to have you with us for a special pumpkin spice edition of the
program autumn finally in full swing green brisk weather. And a spicy set of headlines at least from the economic patch.
S stands for Streaming, Netflix says it's on a path to "Re accelerate growth" adding more than twice as many subscribers as expected. P is for
Profits too, Netflix joining a growing list of firms reporting solid third quarter results, including major U.S. banks and airlines.
Next up Tesla later today in the meantime, inflation talk about Scary Spice new data shows U.K. prices spiking more than 10 percent in September
another challenge of course, for the embattled Truss government. See China the week longer Party Congress continues President Xi gearing up for an
unprecedented third term even as COVID cases hit a former high in Beijing.
And finally, E is for Energy, the Biden administration set to release an additional 15 million barrels of oil from the Strategic Petroleum Reserve
to help ease petrol prices ahead of the midterm elections. Now in the meantime, not much pushed by however on Wall Street pre market futures more
like soft spice after a strong 2-day rally fueled by earnings optimism and the U.K. market calming U-turn.
Of course on tax cuts, it's a different picture today as you can see however, the NASDAQ up more than 3 percent over the past two days. And the
DOW as you can see that top left back above 30,000.
But as we've discussed all this week, lots of investors' concern over the relentless pace of recession forecasts - the rating agency now seeing a
mild U.K. s recession, U.S. recession beginning in the spring. Mark Zandi of Moody's Analytics will be along later to give his outlook the state of
the global economy, of course, hinging on the situation in Ukraine.
And that once again, is where we begin today's show. And just a couple of hours ago, a declaration by the Kremlin that it's imposing martial law in
four regions of Ukraine that Russia recently claimed to have annexed Vladimir Putin making that announcement.
(BEGIN VIDEO CLIP)
VLADIMIR PUTIN, PRESIDENT OF RUSSIA: In this regard, let me remind you that in the Donetsk People's Republic to Luhansk People's Republic, as well as
in the Kherson and Zaporizhzhia regions, martial law was in effect before joining Russia. Now, we need to formalize this regime within the framework
of Russian legislation. Therefore, I signed a decree on the introduction of martial law and these four subjects of the Russian Federation so will be
immediately sent to the Federation Council.
(END VIDEO CLIP)
CHATTERLEY: Now this declaration comes as the new Russian commander in Ukraine. Describe the situation in the Southern region of Kherson as very
difficult "In a red TV interview"; he also said the army will ensure safe evacuations. Russian installed leaders there have begun relocating
civilians.
Nic Robertson joins us on this. Nic, good to have you with us! It feels like an established path, the more difficult the situation gets for Russia
and Ukraine. And for Vladimir Putin specifically, the more stringent the more aggressive, he becomes, what might this declaration of martial law in
these four regions mean for the people there and these evacuations as they're being called and beyond?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, it's hard to know precisely. But I think we know enough about how Russia operates under
martial law. And I think it's worth noting as well, that just across the border inside Russia.
There's now a special decree been signed by President Putin affecting those regions that will restrict travel to and from what was Ukraine. But to
those four annex illegally annexed territories, and also Putin signing an additional decree. That will affect the whole of Russia essentially
allowing all regions to set up a sort of separate security administration that he's allowing for that.
And that he wants the governors to work with that. So it's very wide ranging and sweeping. But as far as those four illegally annexed areas and
Kherson in particular. I think that perhaps gives us the best example of what martial law can mean.
As you were saying, the general in charge of that area last night on TV saying the bridges are damaged, we can't get food supplies in properly to
the City of Kherson there the Ukrainians are advancing. He said his troops are trying to grind down the enemy's advanced but the indications are there
that there's a risk that Russia could lose that territory even be worse.
[09:05:00]
ROBERTSON: The latest siege there which would be a very tough public relations disaster for President Putin back in Moscow. But what happened to
the residence of Kherson, this morning. They were sent text messages telling them that they should evacuate.
Now martial law has been declared that would imply that the military has control of the law and the right to be demand that civilians leave rather
than tell them that they should or request them. Now, we don't have the details of precisely what the martial law means. But the implications are
very serious.
That any civilians in those areas can be potentially detained by the military on the law and can be ordered to do things under law by the
military that is a degradation of how Ukrainians are living under Russian occupation already.
CHATTERLEY: Nic Robertson, thank you so much for the clarification and then the perspective. Thank you. Now, as Nic was saying, Putin also said he will
give additional powers to the local leaders of all Russian regions. Matthew Chance joins us on this now. Matthew, what might that mean?
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: It was good question. And it's one of those areas of this announcement of the partial
martial law; I suppose you can call it. That hasn't been spelled out.
We don't know exactly what powers he's given to the regional leaders. We do know that as well as imposing martial law on those four areas of Ukraine
that Russia earlier annexed. But which doesn't entirely control.
It's also tightened restrictions around the border areas, between Russia and Ukraine. And so it's going to make it much harder, I suppose to access
those areas. It's going to limit civil liberties in those areas as well.
And tighten military control on those border regions, some of which have come under attack from across the border on the other side. And so that's
sort of stretching this or expanding this martial law into Russia proper, as it were. And then, of course, that issue raised about the powers the
unspecified powers being given to the regional leaders.
They're still on disclosed. And I think there'll be various discussions about that in the hours and in the days ahead. But certainly, what we've
seen as one tangible result of this announcement today by Vladimir Putin.
Is that, in general, central control over the country has been somewhat tightened. We don't know to what extent but it's, we're definitely in a
sort of more of a sort of, you know, it's towards the path of authoritarianism, rather than in the other direction. And that will be
something that's of great concern to people in the country.
CHATTERLEY: A more controlled environment. Matthew, great to have you with us! Thank you from Moscow there. OK, let's move on homecoming in the midst
of unrest. Iranian Rock Climber Elnaz Rekabi is back in at home in Iran after competing without wearing a headscarf at an international event in
South Korea over the weekend.
But her return is being met with growing concern she could face repercussions as Iran continues to brutal its brutal crackdown on protests
since the death of Mahsa Amini. Nada Bashir joins us now with more. Nada, what more do we know about where she is? What her family saying and how
safe she really is?
NADA BASHIR, CNN REPORTER: Well, look, safety is a primary concern, Julia. That is certainly the question that relatives, friends, human rights
organizations have been asking. Since we heard that she had gone incommunicado for a time during her time in South Korea.
She has returned home and has to say this couldn't only be described as a hero's welcome for Elnaz Rekabi arriving in the early hours of Wednesday
morning. To crowds at the airport chanting that she is a hero of course, for taking part in the Asian climbing championships with her hair
uncovered. And of course, it's impossible to ignore the context here.
This happened amidst rising protests across the country, women and girls removing their mandatory hijab. These strict regulations are placed on
women and girls by the regime and enforced often violently by the country's morality. Police and women anyone has to cover their hair --.
But also women taking part in any sort of sporting activity overseas while representing the country now we've heard from Elnaz Rekabi, she did issue a
statement on her Instagram prior to her arrival, saying that this was an accident that she had been called to climb unexpectedly. And that as a
result, there have been issues with covering her hair.
[09:10:00]
BASHIR: She also spoke to seek media upon her arrival in Iran reiterating her apology for any confusion that may have been caused and once again said
that this had totally been an accident on her part. But there have been concerns raised by human rights organizations that she may have been
speaking under duress.
That she may be facing control repression by the Iranian authorities. We have known, of course, Iranian authorities in the past, to enforce these
sorts of repressive tactics on notable figures particularly, of course, journalists and other political activists and human rights defenders.
So there is certainly concern around her safety. We've been speaking to numerous human rights actors of the last 48 hours who have said that people
in this sort of position would typically face potentially arbitrary detention ill treatment by the Iranian authorities even potentially
torture.
And it's unclear, what sort of situation now Elnaz Rekabi faces in Iran haven't heard any updates regarding her situation. At present, the Iranian
regime has denied any reports that she would be detained. We heard from the embassy in Seoul saying that these reports were fake news in their words.
But it is still of course a matter of huge concern as to how she will be received by the Iranian authorities, Julia.
CHATTERLEY: We'll continue to watch it very closely. Nada thank you so much for that Nada Bashir there. OK, more "First Move" after this, stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move" after a nightmare over the past two quarters. Netflix is bouncing back the streaming giant reported strong
growth in the third quarter, adding 2.4 million subscribers. Netflix also expects to finish the year strong.
Frank Pallotta joins us on this. Frank, stranger things have happened. The question is can they sustain this. Because it is a dramatic change and
actually what they managed to add in terms of subscribers far better than they predicted.
FRANK PALLOTTA, CNN MEDIA WRITER: Right and we need to really look at the full year of Netflix here. So basically where we start is that it's lost
subscribers the first two quarters it lost about 1.2 million subscribers. Then it had this huge jump where it made about 2.4 million subscribers in
Q3.
Which was over the 1 million subscribers that it expected yay; everyone's having a good time at Netflix everything's back to normal, right? That kind
of true it is back on track. The bleeding has seemingly stopped even Reed Hastings the CEO, said hey look, our time of losing subscribers is over.
We're going to be positive going forward.
[09:15:00]
PALLOTTA: But the problem still is here for the company. It stock is down 55 percent year to date. It's the United States and Canada region arguably
its biggest region, it's changed a little bit. But it's still its biggest region has stopped growing.
And its subscribers have stagnated. So it had to bring in all these new ways to make money with revenue, with things like password clamping down,
and the biggest of all, creating a new ad plan, which is going to kick off in just a few weeks.
CHATTERLEY: Yes, thank God, we're done with shrinking quarters, says Reed Hastings. One quarter does not the future make? And I think to your point,
and it's a very important one, they also warned about the impact of the stronger dollar.
Because of course, that impacts foreign earnings relative to bringing them back home bringing that money back home, of course. But they also warned
about inflation being a problem too. And to your point about providing this lower tier, this ad subsidized lower tier, lower price point for Netflix.
What's the risk perhaps that people decide look at? I'm trying to be more careful with my money. And I go down to that lower tier that has some
adverts, and who they said they weren't so worried. What about everybody else?
PALLOTTA: So this is my concerns about the ads here. So obviously, inflation and the cost of the dollar is impacting not just Netflix but
pretty much every company in the United States and around the world.
But what I'm really interested in is with this ad tier, which is going to cost about 699. It's going to debut in early November. Is that going to
bring in new revenue? Or is it going to cut down the revenue they already have?
So say like someone like me, who pays nearly $20 to have the premium the 4k all the bells and whistles? Am I going to look at this now and go actually,
you know what? I don't really think it's worth that price.
I'm going to cut now my subscriber fee in half so that I can basically go down to the 699. Are we going to see more people do that? Or are we going
to see more people burned come into the company who did not have Netflix before?
That's the big question. And I think the big problem for Netflix is it might be the people that already have Netflix, cutting back their
subscription for an ad supported cheaper plan.
CHATTERLEY: Yes, I'm with you although I saw Chief Product Officer Greg Peters, pooh poohed that we shall see. Frank Pallotta, thank you so much
for that. OK to the U.K. now, where the Prime Minister focused on reasserting her authority.
(BEGIN VIDEO CLIP)
LIZ TRUSS, PRIME MINISTER OF BRITISH: Mr. Speaker, I am a fighter. I have acted in the national interest to make sure that we have economic
stability.
(END VIDEO CLIP)
CHATTERLEY: She's a fighter but she is survivor. Liz Truss went on to the offensive during a grilling in the House of Commons and shrugged off
opposition calls to step down. Again, she apologized for the economic and political turmoil created over the past couple of weeks. The Labour leader
called out what he called a mandate built on fantasy economics.
(BEGIN VIDEO CLIP)
KEIR STARMER, LABOUR LEADER: 55p tax cut gone, corporation tax cut gone, 20p tax cut gone, 2-year energy freeze gone, and tax free shopping gone,
economic credibility gone. And suppose best friend, the Former Chancellor, he's gone as well. They're all gone. So why is she still here?
(END VIDEO CLIP)
CHATTERLEY: Bianca Nobilo joins us now. It was always going to be feisty. This Prime Minister's questions I have to say I shouldn't be enjoying it.
But the cut and thrust of this is very important for policy going forward too. The slight problem here and actually thinks she performed well and you
can give your view too. The U-turns continue, and that's a problem.
BIANCA NOBILO, CNN CORRESPONDENT: It is a problem one of many and feisty. It certainly was we often talk about the pantomime nature about of British
politics. Where we literally had a bit of pantomime there with the benches chanting that refrain as Keir Starmer was laying into the Prime Minister
about her economic policy, which is now in tatters.
Obviously, because the Chancellor has taken control she did come out fighting. It's the strongest performance we've seen from Liz Truss
rhetorically speaking, she had more control. There was more energy in her voice.
She did seem to command some support from her benches, as well. And we've had quite the arc with Liz Truss. Because to begin with, when the mini
budget sent the markets into a spiral, there were no apologies. Then we had sort of gestures towards apology.
Then she appeared very defeated after the firing of her Chancellor. And now we've got apologies, and some fight from Liz Truss. But it doesn't really
change the political reality.
The question is for the Prime Minister for most is just how long she'll stay in post. Most conservatives I've spoken to have decided that they do
not want her to lead them into the next general election. Obviously factors contributing to that being polls that put them so far behind labor and
recent polls from the Conservative Party membership who actually elected Liz Truss.
[09:20:00]
NOBILO: The majority of them don't want her to be Prime Minister any more. So the question is how long will she last now stronger performances like
this some market stabilization or giving her a little more road?
And then adding to that the fact that there just isn't a clear path for the Conservative Party right now to remove the Prime Minister and also what
happens beyond that, because if they don't want to go back to the party membership and have another unedifying leadership contest. Then they will
need to change the rules, Julia.
CHATTERLEY: And therein lies the key and where I dip into your, as I often call your encyclopedic knowledge of British politics. What is the
difficulty now with removing Prime Minister Truss? Does it have to be a case where she is effectively forced to step down in order to replace her?
And I keep reading that the quiet behind the scenes deal with the only person that could perhaps lead them into the next election with any gusto
is? Is Boris Johnson? Is there even a possibility of a return of Boris? Bianca and you can answer all of the above or not depending on how you
choose?
NOBILO: Well, I think it's fair to say that Boris Johnson is probably not trying to extinguish the discussions about whether or not. He might make a
triumphant return to the political scene after the Conservative Party has found itself in deeper chaos. We can probably say that, but in terms of the
immediate the issue is. Is that a freshly elected leader of the Conservative Party is technically safe for one year against a no confidence
vote from within the party?
Now that confidence vote, as we've discussed many times is triggered by 15 percent of the party sending in letters. Now they can make tweaks to that
which they likely might do behind the scenes. But what we understand is that it's more likely MPs think.
That the Prime Minister might be pressured to resign from behind the scenes leverage perhaps being informed that more than a third or nearly half, the
party doesn't have confidence in her and then encouraging her to resign simply because there are too many processes that have to be undone and
tweaked to do it any other way, Julia.
CHATTERLEY: Yes, the heartbreak of this is that we should be talking about policy. And what this government's trying to do to help the British public.
Instead of which were expending oxygen, talking about political shenanigans, which is some, yes, unfortunate.
Bianca, great to have you with us, thank you!
All right, joining us now the leader of the Liberal Democrats, Ed Davey, who was also in the Commons, and joins us now sir fantastic to have you on
the show, too! What did you make of today's performance?
And I said earlier on the show; the Prime Minister said she's not a quitter. The question is, is she a survivor? And can she survive both the
political and the economic turmoil that's been created?
ED DAVEY, U.K. LIBERAL DEMOCRAT LEADER: Well, not on this performance and frankly, not on any of the showings of Liz Truss to date. The problem that
the conservative has that it's actually not just about Liz Truss.
Before her we had Boris Johnson, and how he was dividing the country, dividing his party and deceiving the country. His deception, his lies, was
very damaging to conservatives. Now we've had a period under Liz Truss of gross incompetence where our economy has been trashed, where millions of
mortgage holders have seen their bills go up where solutions for people who are really struggling have not been sufficient?
And where, frankly, the world is looking on aghast. And the conservatives humiliated their own government in the eyes of the world. This can't go on.
There has to be a general election, we have to get rid of the whole Conservative Party.
CHATTERLEY: Sir talk to me about what you think then about Kier Starmer and the Labour Party's policies. Because I hear your point about calling for a
general election and throwing it back to the British public to decide. But are you arguing in that Kier Starmer because that's the way the polls look
could do a better job?
DAVEY: No, I'm not. But I do believe that Liberal Democrats will have a play a really big role in the next election.
CHATTERLEY: What kind of role?
DAVEY: If you look at what's happening on real votes. Well, we can defeat a lot of Conservative MPs to get rid of Conservative government. And we can
be real players to make sure that we have a strong economic policy, where the world actually trusts us again.
That can reduce interest rates and help us grow, where we have a proper policy to help people who are struggling. And that's not just people in low
incomes, people in middle incomes. Now the problems are so great.
And where we have a proper energy strategy, which is both making us more independent so we do not have to import so much fossil fuel from elsewhere
but also helps us get the cost down through renewables and insulating people's homes liberal Democrats have a very constructive alternative
policy and we want to put that to the people.
CHATTERLEY: As a painful but valuable lesson been learned, though, in the last three weeks that policy pronouncements must be paid for. And there's
no quarter if you don't, I mean, I just picked one example; you suggested that the sort of energy plan.
[09:25:00]
CHATTERLEY: That the government put forward should be extended for a year rather than six months. What would be the plan to pay for that just instant
reaction?
DAVEY: The lessons weren't valuable they've been very expensive. And millions of people have paid the price for their mistakes. And Liberal
Democrats have been arguing for over a year that the record unexpected huge profits of the oil and gas companies should have a windfall tax on them.
These shoots tens of billions of pounds are being earned by some oil and gas companies simply because President Putin is killing innocent
Ukrainians. It is morally right that those profits are taxed. And that money is used to protect people for their energy bills.
And not just people on lower incomes and pensioners but frankly, the vast majority of people out there. We put forward costed plans to do that.
We can afford it, unlike the government; we can do it in a responsible way. Because we're prepared to say that this windfall tax should be appropriate
and proper and make sure that money is switched in a fair way. So there's quite a lot of difference between the Liberal Democrats who want a fair and
responsible economic policy compared to the unfairness and recklessness of the conservatives.
CHATTERLEY: Right, I think part of the challenge here in our new freeze one way. And I think the discussion should be had more broadly to your point.
How do you improve services like education and health care without raising debt, while increasing growth and raising productivity?
The challenges here are vast, have we seen the worst? Do you think in terms of the volatility or are you fearful that there could be more to come?
DAVEY: Well, unless the Conservatives go, I think the political instability.
CHATTERLEY: Economic instability.
DAVEY: Well, the political instability and the economic instability are related, aren't they? That's the problem. The instability from the mini
budget was bad enough, when we don't know who's going to be the Prime Minister in a few weeks, time when we see the governing party divided in
several ways that political instability results in bad government and poor economic policy.
CHATTERLEY: So your view is stepped down now?
DAVEY: Sorry, can you repeat that?
CHATTERLEY: So your view is she should step down now?
DAVEY: Well, I think the whole Conservative Party should step down. That should be a general election. That's what I'm saying to you. Because I
don't think the country can afford the division and incompetence of the Conservatives a longer.
You mentioned in your previous question about how reform education and health. Well, I'm very happy to come on your program and give you Liberal
Democrat approaches to that. It isn't just about spending it's about doing things far more effectively.
I, for example, and I asked the Prime Minister question the house just say afternoon about the role of family carers, a lot of the caring we need to
do for people is done by families. And the problem is the way the NHS works at the moment. Brilliant, though it is. It doesn't link into family carers
enough.
So we have people in hospitals for too long that are quite expensive, it's not good for them. And if we support a family carers, we get a better
result, and not cost much, much more money, if any money at all. And the Conservatives don't get that. And that's the point that Liberal Democrats
keep raising.
CHATTERLEY: And come back and talk to us. And we'll talk about a better plan for Britain. Because I think that's the bigger point here when you
arrive.
DAVEY: Thank You.
CHATTERLEY: Ed Davey, thank you so much. Liberal Democrats Leader there. We're back after this stay with us.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Welcome back to "First Move". U.S. stocks are up and running this Wednesday the major averages giving back. Unfortunately, some of the
strong gains chalked up over the past two sessions amid rising bond yields and fresh strength in the U.S. dollar.
However Netflix is a big winner in tech call it the "Netflix Flex" shares up some 10 percent after Q3 subscription growth came in more than doubled.
That was what was expected a strong revival from past quarters even before the launch of its cheaper ad supported plan. Context, as we always say is
everything however; Netflix shares are still down more than 40 percent year-to-date.
Tesla in the meantime under pressure ahead of the release of its latest numbers after the closing bell today an extremely important report for Musk
and CO amid fears of weakening demand and Apple as you can see also under pressure report cites cutting production of the iPhone 14. Perhaps the sign
of softer demand in the smartphone space too.
Investors, of course are highly attuned to any sign that consumers are pulling back on spending as higher borrowing costs bite. And brand new
economic data suggests fresh weakness in housing U.S. housing starts falling more than 8 percent last month after a strong weed in August,
higher mortgage rates continuing to weigh on housing demand. Joining us now for the bigger picture Mark Zandi Chief Economist at Moody's Analytics
Mark, always fantastic to have you on the show!
You know what amid, so much recession discussion and timing and speculation one of the most popular questions I get is are we in recession here in the
United States? Are we in recession? I hand it over to you a quick answer.
MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYST: Thanks, Julia. A definitive no, we're not recession. I think you were just creating so many jobs and
300,000 jobs a month on average in recent months. That's just for context; we need about 100,000 just to maintain stable unemployment.
So that's a lot of jobs. Unemployment is low, 3.5 percent and falling. Still very high number of unfilled positions, layoffs at record lows,
people are quitting their jobs at a high rate, you just don't do that unless you think you can find another one. None of that is consistent with
the idea that the economy is in recession now.
Now, obviously, the risks of recession going forward are pretty high. But at the current point in time, the economy's not in recession, though.
CHATTERLEY: Yes, the definitive no is also part of the reason why prices continue to rise. And the Fed, of course, is frantically hiking interest
rates in order to try and cool it, which is why what's you recently wrote about is so interesting to me?
Because you talked about the prospect of inflation having over the next several months, we're talking about going from just above 8 percent to
around 4 percent in what around six months or so time? What's going to be the mechanism that brings inflation down? Does it tie to those interest
rates or to your point the risk of quite a dramatic softening?
ZANDI: No, it's just arithmetic Julia, good largely goes to oil prices if oil prices stay roughly where they are about $90 a barrel, give or take in
gasoline prices stay roughly where they're roughly $4 a gallon nationwide then on a year over year basis inflation will start to wind down here.
They're going to go from 8 percent to 4 percent that's been because we had no big increases in oil and gasoline prices about a year ago so it's just
pretty much arithmetic.
[09:35:00]
ZANDI: The hard part is going to get is the next stage going from 4 percent back down to the Feds - Federal Reserve's inflation target of two, that's
not going to be easy. That's going to require a slowing and job growth, wage growth and, you know, careful kind of engineering of interest rates by
the Federal Reserve.
And that's why recession risks are so high, so eight to four, assuming oil prices don't go up and that obviously, that's a big assumption, given
everything that's going on in Russia, Ukraine, the European Union, imposing sanctions, OPEC, so forth, and so on. So I don't mean to be pollyannish
here, but if they stay around 90, we should get from eight to four, but it's the four to two that it's going to be more difficult.
CHATTERLEY: It's the stickier part. But it's critically important, because I think as people start to see inflation come down and particularly quite
dramatically, to your point, even if it is the arithmetic, it sort of raises the concern about the sort of swift shift into a recessionary kind
of environment, particularly as the Fed continues to try and signal.
Look, we still need to hike rates. We still need to get on top of this. And that journey to around 2 percent target is so important. How concerned are
you about recession? And are we over talking about it?
ZANDI: Well, I think recession risks are high. I mean, you know, we're getting just calibrating this just right, getting interest rates up high
enough, fast enough to slow growth, but not too far too fast to push the economy in recession. That's not easy, even in, you know, a reasonably
typical time.
But, you know, this is not typical, you got a lot of things going on here. The pandemic is still raging over in Asia last week and in Tokyo, and you
know, you get a real sense that the pandemic is still an issue of supply chains and labor markets.
And I, you know, mentioned Russia's invasion, that still, you know, a problem. And, you know, oil is still a big deal. So, those and those are
just the known unknowns, what about the unknown unknowns that can come out of left field, particularly when the Fed is raising interest rates, putting
pressure on the financial system, and cracks start to develop?
You can see what happened in the UK a couple three weeks ago, when that the announced policies pushed gilt yields up dramatically and caused a problem
in the UK pension system. That's just an example of the unknown, unknown so a lot of risk here.
So I'm very nervous about the next 12 months. One thing I will say was some confidence is that even if we don't go into recession, the next 12 months
are going to be tough. It's not going to be easy. It's going to be very uncomfortable.
CHATTERLEY: Yes, we were just showing what some of the commentary has been in the IMF saying the worst is still to come here as well. I think part of
the reason why we're talking about it for me, the United States matters for most other nations, because if the United States dramatically flows, it has
an impact all around the world.
We're seeing that already with the strength of the U.S. dollar. But it's also important, and I'm very concerned about talking ourselves into
something too. And you and I have discussed this in the past, what should consumers be doing today wherever they are in the world? Let's be clear, if
their economy is slowing, prices are high, and how should you behave not to precipitate something that's not happened yet?
ZANDI: Yes, great point. You know, I don't think we need to be running into the proverbial economic bunker. Because, you know, we are creating lots of
jobs here and unemployment is very low. I think, you know, households; consumers just need to be prudent and cautious.
You know, make sure that they're not taking big risks, making big purchases, taking on particularly a lot of debt. If you have a high cost
debt, like a credit card loan or personal loan, probably a pretty good time to, you know, pay that back or pay down on that if you can, just to you
know, be ready if things do go sideways here.
So, I think do your part, do what you typically do. But you know, don't take on too much risk here at this point in time. Just be a little bit more
cautious, a little bit more prudent than you typically would be.
CHATTERLEY: Yes, smart advice. Mark great to have you with us as always thank you!
ZANDI: Any time. Yes, take care.
CHATTERLEY: You too - of Moody's Analytics. Thank you. And now to a hot topic among astronomers, a gamma ray burst that may be the biggest
explosion ever seen with a telescope. Scientists say the long bright pulse happened when a massive star 2.4 billion light years away collapsed into a
supernova explosion. I have to look at it. Scientists say the star was likely many times the mass of the Sun and the afterglow of the burst is
made up of X-rays scattered by layers of dust within our galaxy.
OK, moving on to today's "Connecting Africa" and we are zeroing in on zero waste farming. It's achieved by putting crops fish and animals together in
a way that mimics Mother Nature. And there's Eleni Giokos discovered this model also is growing jobs and food security across the continent.
[09:40:00]
(BEGIN VIDEOTAPE)
ELENI GIOKOS, CNN CORRESPONDENT (voice over): In Benin's Capital Porto- Novo, you'll find an extraordinary enterprise. About 37 years ago father, Godfried Samujo (ph) began farming with one acre of land. Today he says
that's grown to 54 acres. Here, as part of a circular economy, he carries out a zero waste farming model a sustainable form of agriculture and
agriculture that mimics the natural environment.
UNIDENTIFIED MALE: So what we're doing here? We are copying nature; we call it the "Biomimicry".
GIOKOS (voice over): At the Songhai Center, everything gets reused. Animal waste and wastewater is collected in what - calls a biogas digester.
Methane and fertilizer is produced from this process, generating energy, which partly powers the center.
UNIDENTIFIED MALE: So underneath is a big chamber that is harnessing all those things, producing the gas you see here. So it's producing two things
for us natural fertilizer, and the gas for energy.
GIOKOS (voice over): His zero waste approach doesn't end with producing fertilizer and energy by introducing microbes into the water mixture it
also generates algae and other nutrients, which is used to feed his fish.
UNIDENTIFIED MALE: We call this sink nutrient energy sink. Everything is connected here. The algae can harvest between 60 to 80, 90 percent of the
solar energy through the bacteria we call photosynthetic bacteria incredible.
GIOKOS (voice over): Using aquaculture to make energy and grow the algae, which in turn feed the fish. Father - says it is a perfect example of a
sustainable blue economy.
UNIDENTIFIED MALE: So this is what we are harnessing to the deploying them to start this new movement of an economy that is sustainable that
regenerative are today.
GIOKOS (voice over): Seen as a success the Songhai Model is being replicated in 25 countries across Africa. According to - young
entrepreneurs are being taught zero waste farming practices, with the goal of creating jobs increasing food security and sharing of vital knowledge
across the continents. Eleni Giokos, CNN.
(END VIDEOTAPE)
CHATTERLEY: OK, and that's it for the show. "Marketplace Europe" is up next and I'll see you tomorrow.
(COMMERCIAL BREAK)
[09:45:00]
ANNA STEWART, CNN CORRESPONDENT: Prices are rising, temperatures are dropping, and the stakes have rarely been higher. As winter approaches,
Europe faces a moment of truth in its energy crisis. How will we heat our homes today? And how will we generate energy tomorrow?
Whether it's the cost of fossil fuels and the war in Ukraine, or the transition towards new green power, energy is the watchword for every
business and government on the continent. I'm Anna Stewart in London, and this is "Marketplace Europe".
(BEGIN VIDEOTAPE)
STEWART (voice over): It's almost a perfect winter storm. Russia's war in Ukraine has blown a hole in Europe's supply of fossil fuels, sending prices
soaring. European governments have launched a variety of measures to keep energy bills down and to find new power sources and all this at a time when
the EU is committed to a sweeping energy transition, slashing carbon emissions before the end of this decade. It'll take time and money as a
moment when neither are freely available.
STEWART (on camera): Here are the Energy Intelligence Forum in London, oil and gas companies know they have a delicate balancing act before.
STEWART (voice over): CEPSA the Spanish oil and gas giant has committed billions of dollars to the energy transition, its Chief Executive says by
2030, the majority of the firm's energy will come from renewables.
MAARTEN WETSELAAR, CEO, CEPSA: So what we want to have achieved philosophically is to show that a company with a starting point as a pretty
classic oil, gas and Chemicals Company can transform within a decade to become a company that is majority renewable income, sustainable energy
income by the end of the decade.
And it will be done mostly by investing quite heavily in sustainable aviation fuel, green hydrogen, and in electric charging for vehicles and
all the value chains that come with it. So the idea is to demonstrate that and we have a little bit under eight years ago.
STEWART (on camera): And you can invest billions of Euros in these incredible new energies. But is the infrastructure there in Europe to
support them?
WETSELAAR: Not yet. And it's one of the issues where we really need to work quite closely with the European Union and the Spanish government to make
sure that infrastructure gets built. So customers can actually link into this to these products.
We are quite fortunate. We're in the south of Spain, where there's lots of wind, lots of sun and lots of space. So we can get going. We have a
comparative advantage compared to other companies. And where we are 40 percent of the hydrogen consumption in Spain is near us.
So we have customers, ourselves, but also customers around the corner. So we can start to build these new energies without needing this entire
infrastructure. And then while we're building it, we need to make sure it's good gets put in place, so everybody can enjoy the cleaner and more
affordable energies.
STEWART (on camera): It is inspiring and exciting to look to the future and the new technologies that will power tomorrow. But of course, particularly
looking at the last couple of years with the war in Ukraine, the sanctions on Russia, it's clear, we are not ready yet does more need to be invested
in the bridging fossil fuels.
WETSELAAR: I think there's a there's a short term response that is about keeping the lights on in Europe and about keeping people warm over the
winter. And then almost anything goes so drilling more gas wells are switching on coal fired power plants. It's all fair game in order to keep
people - get people through the winter.
But as you start planning for four or five years out, you have real choices to be made. Am I going to develop new gas and LNG and oil fields or I'm
going to spend that money to develop green hydrogen in Europe giving me energy security and giving me energy affordability? I think these choices
are now in front of us. And we need to make them wisely.
STEWART (on camera): Will your ever be energy independence?
WETSELAAR: It can be. It can be. Europe has enough wind and sun and other sources often have reliable clean energy to look after itself. And it may
not be the ultimate answer. So it may well want to buy some energy from others. But it will never want to be dependent on a single source again, as
it has been on Russia for the past.
It has a long way to go in terms of developing its own resources. In the end, the global optimization will probably mean that they will buy some
energy from Africa, from America to try to make things go around but we're a far cry from the situation. Right now we have a lot of our own renewable
source to develop and that I think is what Europe should prioritize above everything else.
STEWART (voice over): The energy transition could help prevent future energy crises, but it's unlikely to ease the shortfall this coming winter.
That's what Dr. Tatiana Mitrova Research Fellow at The Center on global energy policy says.
[09:50:00]
DR. TATIANA MITROVA, CENTER ON GLOBAL ENERGY POLICY, COLUMBIA UNIVERSITY: I'm afraid it's the worst crisis that our continent has ever faced. Even if
we remember about the events in 1970s, it's not comparable in scale, because then the crisis was only with the oil supplies. And now, the crisis
regards not only oil, but also gas, coal.
So this is the last wake up call for the European regulators, for the consumers, for the industries to really put all the bets on energy
transition, where Europe has a really competitive advantage compared to the other economies. There are all the technologies available.
So there is capital available, there is human power available. So we have everything really to make this Green Deal happening faster than expected.
So it will be really a shame not to use this opportunity this energy revolution.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
(BEGIN VIDEOTAPE)
STEWART (voice over): This could be where Europe gets a fresh start on its energy future. Tucked away on Germany's Northwestern Coast is the City of
Wilhelmshaven. It's been a naval base, a beach resort and now it's hoping to be Germany's first ever green energy hub.
JENS SCHMIDT, CTO, TES: You can get everywhere. What we're also seeing here is this dark colored that is the planned hydrogen backbone. So here we're
going to put hydrogen we're going to convert the green gas on the lot that we've seen into hydrogen again, we can inject it into the grid and then it
goes to the main industrial off takers all the way through Germany.
STEWART (voice over): Three Energy Solutions or TES is a green hydrogen company behind these plants. Their hope is that this port can produce and
transport green energy across Germany and the continent. The end goal is to import more than 5 million tons of hydrogen; enough to meet about 10
percent of Germany's primary energy needs each year.
SCHMIDT: We are building the import hub. And not only the terminal that imports this green gas but also the technical details to convert it back
into green hydrogen green electricity, capturing all the CO2 bring the CO2 back to the place where we produce the hydrogen and so it moves to the
circle. And that allows us to bring the green hydrogen in a very efficient and very economic way to Europe into Germany.
STEWART (voice over): Decarbonizing the German economy isn't just about being eco-friendly. For Germany's government, it's key to their energy and
security strategies. As Russia's war on Ukraine has put pressure on supplies of oil and natural gas, the German Chancellor Olaf Scholz says
diversification is the key. He wants to see a clean hydrogen boom of which tests hopes to be a part.
MARCO ALVERA, GROUP CEO, TES: So TES is something magical. It turns the sunlight of a desert into ENG, which is electric natural gas; it's like
completely renewable natural gas. So we do that by converting the electricity from the deserts or from windy places into hydrogen and then
with a process called - we convert the hydrogen into methane.
And once we have the methane, we can put it in a conventional LNG liquefied or conventional LNG ship. So we're turning the sunlight into something that
we can trade we can store we can bank we can burn we can ensure solving what's the energy industry's greatest issue, which is how to break the
chicken and egg between a promising world a very cheap and abundant renewables and a very kind of inertia prone industrial system that it's
hard to abandon its legacy.
STEWART (on camera): You are a disruptive company, you once I think described yourself as the Tesla of the energy world is that how disruptive
you want to be?
ALVERA: We want to be really disruptive but we're not replacing the current energy companies. We're working with them using their existing
infrastructure.
[09:55:00]
ALVERA: So it's a way of giving a second, third, fourth, fifth life to some assets, as some people were just thinking were, you know, destined to not
be useful anymore when we were moving to a completely renewable system. By doing that we're saving trillions of dollars. And more importantly, we're
accelerating the transition.
STEWART (voice over): Europe has a long way to go. Hydrogen currently makes up less than 2 percent of the EU's energy usage. Most of it is used in the
chemicals industry, and that creates a lot of CO2 emissions. So its future as a renewable energy source is where the potential lies.
DR. MINH KHOI LE, HEAD OF HYDROGEN RESEARCH, RYSTAD ENERGY: I think the challenge with hydrogen, not just in Europe or anywhere in the world is
really on the infrastructure. And if you can reuse a lot of existing infrastructure, that's great. But I think it's always good to have ambition
especially in situation like this where you know, not only sustainability but reliability of the energy supply is a key.
STEWART (voice over): Now the European Commission is betting big on renewable hydrogen. In July, it announced more than $5 billion in state aid
for companies using hydrogen technology, including Bosch and Daimler Trucks.
Daimler is one of several companies with separate projects in the works, including hydrogen powered trucks. Meanwhile, Airbus wants hydrogen to
power the world's first zero emissions commercial aircraft, which it hopes to develop by 2035. The Chief Executive told CNN that hydrogen can be a
true game changer.
GUILLAUME FAURY, CEO, AIRBUS: We believe that's really a very, very forward looking technological solution for the future of aviation. That's why we
are investing so much in hydrogen.
STEWART (voice over): The green Energy Hub in Wilhelmshaven hopes to start operations at the end of 2025. TES already has funding from big banks like
HSBC and Unicredit, to make it a reality. For now, the plans are just a model. But if they realize their potential, it could change the way that
homes are heated across the continent.
ALVERA: It's a win, win, win, win and win the climate wins, the exporters win the technology providers win and more importantly, Europe can really
start reducing its carbon footprint in a very effective, scalable and sustainable way.
(END VIDEOTAPE)
STEWART: Well, that is it for this episode of "Marketplace Europe". Thanks for joining us you can find more of our reporting online @cnn.com/mpe but
for now, goodbye!
(COMMERCIAL BREAK)
END
